Back in the Spotlight Romania. 2 General Romania 3 2 nd largest CEE country in terms of population, 3 rd largest in terms of economy; Above average economic.

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Presentation on theme: "Back in the Spotlight Romania. 2 General Romania 3 2 nd largest CEE country in terms of population, 3 rd largest in terms of economy; Above average economic."— Presentation transcript:

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Romania 3 2 nd largest CEE country in terms of population, 3 rd largest in terms of economy; Above average economic growth forecasts; Struggles with prejudices and legacy issues such as: - Corruption (true, but improving and less than for example Greece and equal to Italy according to the 2013 Transparency International survey); - Many property companies entered at the top of the market and got burned, things have moved on since then and now one can enter at the bottom rather than at the peak of a market cycle; - Poverty and underdevelopment (partially true in the remote countryside, but according to Eurostat, GDP in the Bucharest – Ilfov metropolitan region is 111% of the EU average). No downside comes without an upside…..

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Romanian Retail Market Opportunities 5 Romania still offers development opportunities in specific cities, retail sales per capita are the lowest in CEE, but are expected to show strong growth, a disproportionate share of which will go to non-food items

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Romanian Industrial Market Opportunities 6 Given the low wages in manufacturing, the recent improvements in infrastructure and the strategic location Romania is ”the growth story” in CEE outside Poland

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Bucharest Retail Market 9 Net additions in Bucharest in 2014 at the lowest level since 2010, 2015-2016 to see a surge as several large new schemes in so far undeveloped parts of the city will be completed. Vacancy rate is expected to retreat nevertheless as retail sales growth has picked up

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Bucharest Industrial Market 10 Virtually no new additions since the onset of the crisis, availability has peaked and is falling rapidly as existing stock fills up and there is no speculative supply and also the number of BTS developments remains very limited due to strict contractual requirements imposed by developers

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Bucharest Investment Market 11 Yields in Bucharest are very attractive, both from a historic perspective, as well as from a regional perspective. While yields in Warsaw are almost at pre-crisis levels, those in Bucharest are still far north from where they were in 2007

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15 Not present Strong Presence of International Retailers in Romania 17 out of the Top 20 most active international retailers in Europe are present in Romania

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Industrial Sector 16 The automotive manufacturing sector is currently one of the main drivers of the Romanian economy. Romania is the 9 th largest car producer in the EU, ahead of Italy, and in 2013, has registered the highest growth rate in EU - 22%. Romania has attracted Renault and Ford, but also many other automotive related manufacturers

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Industrial Sector 17 Concentration of market players in Romania is still very low from a CEE perspective, with the largest owner having just under 12% market share (one project). As in most other CEE countries concentration levels are already very high, in the Czech Republic for example, market leader CTP has a share of over 34%, Romania is an unique opportunity for specialized investors to build a larger platform.

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19 Million € Transaction volumes registered in Romania were third only behind Poland and the Czech Republic CEE Investment Volumes (excl. Russia) The transaction volumes in Romania remained below € 350 million per year since 2009, while Poland and the Czech Republic recovered much faster, resulting in a decreasing market share for Romania in CEE 2006 was the first year with a relevant transaction volume in Romania, as institutional products started to be delivered and the EU accession of the country became imminent

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Romania Investment Volumes 20 Record setting yield, America House sold at under 6% Largest investment volume recorded in Romania NEPI the most active player

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Romania Financing Availability 22 2006 / 2007 margins were below 100 bps, virtually no spread with the other countries in the CEE (Poland, Czech Republic) 2009 / mid-2012 was a period in which banks were very reluctant to new financing in real estate, dealing mainly with the management of the existing portfolio Financing market improved since the second half of 2012, with several new large transactions being financed (AFI Group obtained € 13.4 million from UniCredit to finance the development of the first phase of AFI Office and € 30 million from Raiffeisen for the new shopping mall in Ploiesti) During the last two years, banks’ sentiment towards real estate financing improved, in line with macroeconomic indicators Conditions LTC / LTV 50-65% DSCR 1.20-1.30 Maturity 5-10 years (with balloon) Full amortization 10-20 years Interest risk hedging requirements Depending on each bank’s policy, loan amount and maturity

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Romanian CDS Rates Evolution 23 CDS (credit default swap) levels have a direct influence on the interest rate margins, which are still higher in Romania than in Poland and Czech Republic (for example, for a 5-year non recourse loan one could expect a margin between 400 bps – 550 bps)